Dominion Sale Shows Old Coal Power Plants Are Nearly Worthless

Brayton Point Power Station, a 1,528-megawatt power station in Somerset, Mass., with three coal-fired units and one unit fired by oil or natural gas. Dominion has owned it since 2005.

Kincaid Power Station, a 1,158-megawatt power station in Kincaid, Ill., with two 579-megawatt coal-fired units. Dominion has owned Kincaid since 1998.

Elwood Power Station, a 1,424-megawatt power station outside Chicago, with nine natural gas-fired combustion turbines. Dominion has owned a 50 percent interest (712 megawatts) in and operated the station since Elwood became operational in 1999.

The sale will require the approval of the Federal Energy Regulatory Commission (FERC) and Hart-Scott-Rodino antitrust clearance.

Dominion announced last September that it was exiting the merchant coal-fired generation business as part of the company's continual review of its assets to ensure they fit strategically and support its objectives to improve return on invested capital and shareholder value. The sale is expected to result in after-tax proceeds of approximately $650 million, which includes cash tax benefits generated from the sale. The company plans to invest the proceeds in the company's regulated businesses and reduce debt needs.

"Merchant power" is basically when you own a station and sell the electricity to a utility. It's always a risky business and at a time when America's electricity use is falling overall and the price of electricity from natural gas is falling, now's looking like a good time to bail for whatever Dominion can get.